The central government has declared a 3% rise in Dearness Allowance (DA) for its employees and Dearness Relief (DR) for pensioners, starting July 1, 2024. This adjustment, greenlit during a Cabinet meeting led by Prime Minister Narendra Modi, was confirmed by Union Minister Ashwini Vaishnaw. With this hike, the DA now moves from 50% to 53% of the basic pay.
Affecting Over 1 Crore Employees and Pensioners
This increase will benefit over one crore government employees and pensioners nationwide. Tied directly to inflation, this adjustment is designed to help them manage escalating living costs. The financial burden on the central exchequer from this move is estimated to be Rs 9,448 crore. Alongside employees, pensioners will also experience a 3% boost in DR, easing financial pressures for retirees. Both allowances are reviewed biannually, typically in January and July, with the last increase being a 4% hike in March 2024.
How Much of a Salary Increase Will Employees See?
The most pressing question is the impact on employees’ take-home pay. To break it down, if an employee’s monthly salary is Rs 30,000, with a basic pay of Rs 18,000, they currently receive Rs 9,000 as DA—50% of their basic pay. Following the 3% hike, this employee will now receive Rs 9,540 in DA, marking an additional Rs 540 each month. As a general rule, the higher the basic salary, the larger the DA increment, meaning employees with heftier basic pays will see more substantial increases.
How is the DA Hike Calculated?
The government calculates DA and DR increases based on the All India Consumer Price Index (AICPI), which tracks cost-of-living fluctuations. The DA percentage hike is determined by the 12-month average of the AICPI, ending in June each year. Although DA adjustments occur in January and July, official announcements often lag a few months, typically in March and September.
In 2006, the government revised the DA calculation formula, which now reads:
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 12 months – 115.76) / 115.76) x 100.
For central public sector employees, the formula differs slightly:
Dearness Allowance Percentage = ((Average of All-India Consumer Price Index (Base Year 2001=100) for the past 3 months – 126.33) / 126.33) x 100.
Back in March 2024, the DA was increased by 4%, bringing it up to 50% of the basic pay. This regular adjustment, aimed at countering inflation, now sees the DA at 53% following the latest 3% rise. The purpose behind these hikes is to ensure government employees and pensioners can keep pace with the rising costs of essential goods and services.
published by Dailybharat
